Obama and the facts

FACT CHECK: Obama's Job Creation, Deficit Claims Questionable
President Obama turned the page on 100 days in office with an iffy boast about job creation and claims of fiscal prudence that are hard to square with his spending.


Associated Press
Thursday, April 30, 2009
WASHINGTON -- -- President Obama turned the page on 100 days in office with an iffy boast about job creation and claims of fiscal prudence that are hard to square with his spending.
Obama spoke with abundant confidence about his chances for achieving the big-ticket items on his agenda despite economic calamity:
-- His assertion that his proposed budget "will cut the deficit in half by the end of my first term" is an eyeball-roller for many economists, given the uncharted terrain of trillion-dollar deficits the government is negotiating.
-- He promised vast savings from increased spending on preventive health care in the face of doubts that such an effort, however laudable it might be for public welfare, can pay for itself, let alone yield huge savings.
-- He pitched a remedy for Social Security's long-term crisis that analysts say won't fix half the problem.
Obama held a prime-time news conference Wednesday and addressed citizens at an Arnold, Mo., high school, using both events to review progress at the 100-day mark and look ahead.
A look at some of his claims:
OBAMA: "We began by passing a Recovery Act that has already saved or created over 150,000 jobs." -- from news conference.
THE FACTS: This assertion is dubious on several levels. For starters, the U.S. has lost more than 1.2 million jobs since Obama took office, according to the Bureau of Labor Statistics. Even if Obama's stimulus bill saved or created as many jobs as he says, that number is dwarfed by the number of recent job losses.
But Obama's number is murky, at best. The White House has not yet announced how it intends to count jobs created by the stimulus bill. Obama's number is based on a job-counting formula that his economists have developed but have not made public. Until that formula is announced --probably in the coming week or so -- there's no way to assess its accuracy.
Whatever the formula, economists who study job creation say it will require some creative math. That's because Obama has lumped "jobs saved" in with "jobs created." Even economists for organizations that stand to benefit from the stimulus concede it probably is impossible to estimate saved jobs because that would require calculating a hypothetical: how many people would have lost their jobs without the stimulus.
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OBAMA: "We must lay a new foundation for growth, a foundation that will strengthen our economy and help us compete in the 21st century. And that's exactly what this budget begins to do. It contains new investments in education that will equip our workers with the right skills and training; new investments in renewable energy that will create millions of jobs and new industries; new investments in health care that will cut costs for families and businesses, and new savings that will bring down our deficit." -- news conference.
"I've personally asked the leadership in Congress to pass into law rules that follow the simple principle: You pay for what you spend, so that government acts the same way any responsible family does." -- in Missouri.
THE FACTS: While the budget does set a roadmap for achieving the president's goals, it says nothing about how to pay for his health plan, expected to cost more than $1 trillion over the next 10 years. And while the deficit, under the plan, would drop to $523 billion in 2014, it achieves it with unrealistic assumptions, such as projections that spending in Iraq and Afghanistan will amount to only $50 billion a year.
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OBAMA: "Number one, we inherited a $1.3 trillion deficit....That wasn't me." -- in Missouri.
THE FACTS:
Congress, under Democratic control in 2007 and 2008, held the purse strings that led to the deficit Obama inherited. A Republican president, George W. Bush, had a role too: He signed the legislation.
Obama supported the emergency financial bailout package in Bush's final months -- a package Democratic leaders wanted to make bigger.
To be sure, Obama opposed the Iraq war, a drain on federal coffers for six years before he became president. But with one major exception, he voted in support of Iraq war spending.
The nonpartisan Committee for a Responsible Federal Budget has estimated Obama's policy proposals would add a net $428 billion to the deficit over four years, even accounting for his spending reduction goals. Now, the deficit is nearly quadrupling to $1.75 trillion.
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OBAMA: "I think one basic principle that we know is that the more we do on the (disease) prevention side, the more we can obtain serious savings down the road. ... If we're making those investments, we will save huge amounts of money in the long term." -- in Missouri.
THE FACTS: It sounds believable that preventing illness should be cheaper than treating it, and indeed that's the case with steps like preventing smoking and improving diet and exercise. But during the 2008 campaign, when Obama and other presidential candidates were touting a focus on preventive care, the New England Journal of Medicine cautioned that "sweeping statements about the cost-saving potential of prevention, however, are overreaching." It said that "although some preventive measures do save money, the vast majority reviewed in the health economics literature do not."
And a study released in December by the Congressional Budget Office found that increasing preventive care "could improve people's health but would probably generate either modest reductions in the overall costs of health care or increases in such spending within a 10-year budgetary time frame."
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OBAMA: "You could cut (Social Security) benefits. You could raise the tax on everybody so everybody's payroll tax goes up a little bit. Or you can do what I think is probably the best solution, which is you can raise the cap on the payroll tax." -- in Missouri.
THE FACTS: Obama's proposal would reduce the Social Security trust fund's deficit by less than half, according to the nonpartisan Tax Policy Center.
That means he would still have to cut benefits, raise the payroll tax rate, raise the retirement age or some combination of these measures to deal with the program's long-term imbalance.
Workers currently pay 6.2 percent and their employers pay an equal rate -- for a total of 12.4 percent -- on annual wages of up to $106,800, after which no more payroll tax is collected.
Obama wants workers making more than $250,000 to pay payroll tax on their income over that amount. That would still protect workers making under $250,000 from an additional burden. But it would raise much less money than removing the cap completely.
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OBAMA: "My hope is that working in a bipartisan fashion we are going to be able to get a health care reform bill on my desk before the end of the year that we'll start seeing in the kinds of investments that will make everybody healthier." -- in Missouri.
THE FACTS: Obama has indeed expressed hope for a health care plan that has support from Democrats and Republicans. But his Democratic allies in Congress have just made that harder. The Democratic budget plan that Congress passed Wednesday gives Democrats the option of denying Republicans the normal right to block health care with a Senate filibuster. The filibuster tactic requires 60 votes to overcome, making it the GOP's main weapon to ensure a bipartisan outcome. The rules set by the budget mean that majority Democrats could potentially pass health care legislation without any Republican votes, sacrificing bipartisanship to achieve their goals.